UC-NRLF 


03 


THE   SUBWAY   PROBLEM 


AN  ADDRESS  DELIVERED  BY 

WILLIAM  G.  McADOO,  Esq. 

AT  THE  SIXTH  ANNUAL  DINNER  UNDER  THE  AUSPICES 

OF  THE  BOARD  OF  TRUSTEES  OF 

PLYMOUTH  CHURCH 


BROOKLYN 
THURSDAY  EVENING,  JANUARY   19,   1911 


THE   SUBWAY   PROBLEM 


AN  ADDRESS  DELIVERED  BY 


WILLIAM  G.  McADOO,  Esq. 


AT  THE  SIXTH  ANNUAL  DINNER  UNDER  THE  AUSPICES 

OF  THE  BOARD  OF  TRUSTEES  OF 

PLYMOUTH  CHURCH 


BROOKLYN 
THURSDAY  EVENING,  JANUARY  19,   1911 


Mr.  Chairman,  Ladies  and  Gentlemen: — 

The  Subway  Problem  is  not  so  intricate  and  complex  as  is  generally 
supposed.  It  is,  in  fact,  quite  simple.  The  difficulty  arises  from  the  con- 
fusion of  the  public  mind,  which  has  been  deflected  from  the  main  issue 
by  many  extraneous  considerations.  If  the  essential  facts  can  be  put 
together  in  an  easily  comprehensible  form,  a  real  service  will  be  rendered. 
In  order  to  do  this,  the  law  governing  the  construction  and  operation  of 
subways  in  New  York  ought  first  to  be  understood. 

Upon  the  Public  Service  Commission,  and  upon  it  alone,  rests  the  duty 
of  laying  out  and  determining  routes  and  of  awarding  contracts  for  con- 
struction. After  this  the  Board  of  Estimate  and  Apportionment  is  charged 
with  the  duty  of  approving  said  contracts  and  of  appropriating  the  neces- 
sary money  to  carry  them  into  effect. 

In  the  discharge  of  this  duty  the  Public  Service  Commission,  after 
years  of  study  and  work,  evolved  and  adopted  plans  for  the  so-called  "Tri- 
borough  Route."  The  backbone  of  this  system  is  a  trunk  line  extending 
from  the  Battery  under  Broadway  and  Lexington  Avenue  to  138th  Street, 
in  the  Bronx,  from  which  point  there  are  two  branches,  one  extending  to 
Woodlawn  Cemetery,  the  other  to  Pelham  Bay  Park.  In  Brooklyn  it 
embraces  the  Fourth  Avenue  Subway,  now  under  construction,  extending 
across  the  Manhattan  Bridge  to  Centre  Street,  and  terminating  under  the 
new  Municipal  Building  near  City  Hall  Park,  in  Manhattan.  Connecting 
with  the  Fourth  Avenue  Subway  at  DeKalb  Avenue,  another  line  proceeds 
under  Lafayette  Avenue  to  Broadway,  Brooklyn,  thence  westwardly  under 
Broadway  and  across  the  Williamsburg  Bridge  to  the  Centre  Street  Sub- 
way, this  line  also  terminating  at  the  new  Municipal  Building.  As  the 
Brooklyn  system,  so  planned,  was  disconnected  entirely  from  the  trunk 
line  in  New  York,  it  was  proposed  to  build  a  spur  under  Canal  Street  with 
a  transfer  station  at  Broadway,  so  that  Brooklyn  traffic  might  be  inter- 
changed at  that  point. 

No  sooner  had  invitations  for  bids  for  construction  been  invited,  than 
attacks  upon  the  Triborough  system  began  to  emanate  from  many  quarters, 
and  by  the  time  the  bids  had  been  opened,  these  attacks  had  produced  a 
sufficient  effect  to  make  it  doubtful  whether  or  not  the  Board  of  Estimate 
and  Apportionment  would  vote  the  necessary  money  for  the  construction 
of  the  system.  Among  the  chief  arguments  urged  against  it  were : 

Excessive  cost,  due  in  great  measure  to  the  unusually  large  dimensions 
adopted,  and  to  the  so-called  "reservoir"  stations;  defects  in  the  route  and 
operating  scheme  itself,  resulting  in  large  part  from  the  failure  to  provide 
for  through  operation  of  trains  between  the  boroughs  of  Brooklyn,  Man- 
hattan and  the  Bronx. 

At  this  time  no  proposal  had  been  submitted  by  the  Interborough  Com- 
pany for  extensions  of  its  system  upon  any  comprehensive  or  definite  plan, 
and  the  whole  situation  appeared  to  be  in  a  hopeless  state.  No  one  was 
attempting  to  meet  the  arguments  advanced  by  the  antagonists  of  the  Tri- 

3 


borough  system,  when,  on  the  18th  of  November,  the  Hudson  and  Man- 
hattan Railroad  Company  filed  a  proposal  with  the  Commission  offering  to 
provide  $50,000,000  to  equip  a  modified  Triborough  System  and  to  operate 
the  same.  At  that  time  it  was  understood  that  the  large  dimensions  of  the 
Triborough  plan  must  be  adhered  to  and  the  offer  was  based  on  that  speci- 
fication. Since  the  Interborough's  offer  is  based  on  a  smaller  dimension, 
which  is,  apparently,  now  considered  sufficient,  all  Triborough  figures  of 
cost  should  be  revised  on  the  Interborough  dimension,  to  get  a  fair  com- 
parison between  the  cost  of  the  Independent  System  and  the  Interbor- 
ough's extensions. 

This  proposal  was  limited  to  the  15th  day  of  December,  1910,  the 
Company  having  stated  to  the  Commission  that,  unless  definite  action  was 
taken  on  or  before  that  date,  the  proposal  would  be  withdrawn.  No  action 
having  been  taken,  the  offer  expired. 

On  the  3rd  of  December  the  Interborough  submitted  to  the  Public 
Service  Commission  an  offer  to  build  certain  extensions,  appropriating  a 
part  of  the  Triborough  route,  and  including  a  subway  under  Seventh  Ave- 
nue from  42nd  Street  to  the  Battery  and  an  extension  under  Flatbush 
Avenue  and  Eastern  Parkway  to  Buffalo  Avenue. 

Without  taking  final  action,  the  Commission  referred  this  proposal  to 
the  Board  of  Estimate  and  Apportionment  for  an  expression  of  that 
Board's  opinion  as  to  whether  or  no  the  general  idea  was  acceptable  before 
the  Commission  would  discuss  the  details  with  the  Interborough. 

The  Board  of  Estimate  and  Apportionment  has  the  matter  under  ad- 
visement. Meantime,  all  bids  for  construction  of  the  Triborough  system 
are  held  in  abeyance,  and  no  progress  seems  possible  until  the  Interbor- 
ough's offer  has  been  definitely  disposed  of. 

THE  ISSUE. 
The  real  question  is : 

Shall  the  City  build  an  independent  system  of  subways,  with  its  own 
money,  to  be  equipped  with  private  capital  and  operated  under  a  short- 
term  lease,  the  City  to  share  in  the  profits,  thus  assuring  competition  ? 

or 

Shall  the  City  permit  the  Interborough  Company  to  build  extensions 
of  its  present  system  upon  terms  that,  in  effect,  create  a  lease  of  49  years' 
duration,  and  require  $53,000,000  of  City  money,  thus  assuring  a  monopoly? 

A  vital  issue  of  municipal  policy  is  here  presented.  Upon  its  wise 
determination,  the  welfare  of  the  community  depends  for  many  years  to 
come.  The  relative  merits  of  "independence"  and  "monopoly,"  as  repre- 
sented by  the  two  plans,  must,  therefore,  be  considered. 

THE  INDEPENDENT  SYSTEM. 

Throughout  I  shall  refer  to  the  system  I  have  in  mind  as  the  "Inde- 
pendent System."  It  is  the  same  as  the  "Triborough  Route"  with  certain 
modifications  and  additions,  as  shown  on  the  map  submitted.  (Exhibit  1.) 
It  provides  for  a  trunk  line  from  the  Battery  to  138th  Street  under  Broad- 
way and  Lexington  Avenue,  for  two  branches  in  the  Bronx — to  Woodlawn 
Cemetery  and  Pelham  Bay  Park,  respectively;  for  the  Lafayette  and 
Broadway  loop  in  Brooklyn,  and  it  takes  in  the  Fourth  Avenue  Subway, 
the  Williamsburg  and  Manhattan  Bridges,  and  the  Centre  Street  loop. 

Five  very  essential  and  necessary  additions  and  modifications  have 


been  made,  which,  in  my  judgment,  not  only  make  for  a  system  of  great 
flexibility  and  efficiency,  but  also  overcome  the  fatal  defects  of  the  Tri- 
borough  route. 

First.  By  physically  connecting  the  Manhattan  and  the  Williamsburg 
Bridges  through  the  Centre  Street  loop  to  the  main  trunk  at  Broadway 
near  Spring  Street,  and  at  Broadway  and  Vesey  Street.  This  will  enable 
trains  operated  over  both  the  Williamsburg  and  Manhattan  Bridges 
to  be  run  through  the  Centre  Street  loop  on  to  the  Broadway  trunk  line 
both  for  uptown  and  downtown  traffic,  thus  making  the  bridges  an  effective 
and  essential  part  of  the  system  and  obviating  the  chief  objection  hereto- 
fore urged  against  this  part  of  the  Triborough  plan,  and,  at  the  same  time, 
it  eliminates  the  necessity  for  constructing  the  expensive  and  unsatisfac- 
tory Canal  Street  subway.  (Exhibit  2.) 

Second.  By  the  construction  of  a  line  extending  from  the  Lexington 
Avenue  trunk  at  the  Grand  Central  Station,  under  42nd  Street  and  Sixth 
Avenue  to  Herald  Square,  thence  down  Broadway  to  10th  Street,  where 
it  again  joins  the  main  trunk  line,  thus  curing  another  serious  defect  of  the 
original  Triborough  system  by  providing  for  the  delivery  of  traffic  through 
the  congested  Broadway  section  on  the  West  Side  and  landing  passengers 
within  one  block  of  the  Pennsylvania  Railroad  station. 

Third.  A  new  tunnel  under  the  East  River,  either  from  Liberty  or 
Wall  Street,  Manhattan,  and  entering  Brooklyn  under  Pineapple  or  Cran- 
berry Street,  is  also  contemplated.  It  is  indicated  in  dotted  lines  on  the 
map.  It  can  be  built  for  approximately  $8,000,000. 

Fourth.  Relief  for  Queens  is  brought  within  reach  by  this  plan  by  a 
continuation  of  the  Broadway  Subway  in  Brooklyn  to  the  Queens  County 
line,  which  will  provide  an  admirable  shortcut  to  up-town  and  down-town 
New  York  via  Williamsburg  Bridge  with  the  proposed  connections  in  New 
York  at  Spring  Street  and  at  Vesey  Street.  Or  an  extension  can  readily 
be  made  from  59th  Street  and  Lexington  Avenue  crossing  the  new  Queens- 
boro  Bridge. 

Fifth.  A  new  feature  is  the  proposed  tunnel  connection  with  Staten 
Island,  which  can  be  effected  by  a  branch  of  the  Fourth  Avenue  line  be- 
ginning at  or  about  67th  Street  and  extending  westwardly  under  the  Bay 
to  Staten  Island.  This  is  an  entirely  feasible  piece  of  engineering,  and, 
while  the  cost  is  not  included  in  the  figures  I  shall  give  you,  it  can  be  added 
to  the  system  at  any  time.  This  will  cost  $12,000,000,  possibly  less. 

The  dimensions  proposed  are  somewhat  larger  than  the  present  Inter- 
borough,  but  not  so  large  as  the  Triborough  cross  section,  and  at  all  express 
stations  it  is  planned  to  have  loading  and  unloading  platforms,  so  that  the 
collision  of  traffic  which  now  results  at  express  stations  of  the  present 
Subway  shall  be  prevented.  The  so-called  "reservoir  stations"  have  been 
cut  out  as  being  unnecessary  and  unduly  expensive.  The  general  type  of 
construction  is  of  the  very  best  and  admits  of  the  operation  of  improved 
cars  longer  than  the  present  Interborough  type,  assuring  a  larger  capacity 
and  greater  economies  in  operation.  The  ventilation  system  will  be  a  great 
improvement  over  the  Interborough  system. 

Taken  all  in  all,  this  system  will  be,  in  its  construction  and  equipment, 
a  distinct  advance  over  the  present  Subway.  If  begun  now  and  logically 
carried  out,  it  will  prove  the  most  comprehensive  and  effective  transporta- 
tion arm  yet  proposed.  It  can  be  built  and  put  into  operation  within  five 
years. 


COST. 

Careful  estimates  of  competent  engineers  show  that  the  cost  of  this 
system,  as  shown  in  solid  lines  on  the  map,  including  tracks  and  signals, 
will  not  exceed  $107,000,000.  The  City  has  $60,000,000  in  hand.  $10,000,- 
000  per  annum,  which  the  Comptroller  has  repeatedly  stated  that  the  City 
can  easily  set  aside  for  the  next  five  years,  will  produce  an  additional 
$50,000,000,  making  a  total  of  $110,000,000,  which  is  all  that  the  City  will 
have  to  provide  to  secure  this  splendid  transportation  facility. 

The  details  of  cost  are  as  follows : 

Dimensions  of  subway  to  be  same  as  Interborough  with  increase  of  9  inches  in  vertical  height 


ITEM 

Length  ol 
Line 

Length  of 
Single  Track 

Coit  of  Tunnel  Con- 
struction 

Cost  of  Trick  Con- 
struction, Signals  and 
Station  Finish 

1.  Broadway-Lexington  Ave.,  Battery  to  157th  St.  .   . 
2    9th  St   to  33d  St    via  Broadway            

10.32 
1.27 

39.00 
2  54 

$48,014,000 
5  750  000 

$5,135,000 
410  000 

3    Lafayette  Avenue   Brooklyn     

2.70 

5  40 

4,500,000 

520  000 

4  .  Broadway  &  Williamsburg  Bridge  to  Lay  f  ayette  Ave  .  , 
Brooklyn  ...        .... 

2.20 

4.40 

5,280,000 

814,000 

5    Jerotne  Ave   to  \Voodlawn        .        

5.00 

15  00 

4,100,000 

1,324,000 

6    Pelham  Park  via  138th  St  

6.73 

17.46 

8,642,000 

1.785,000 

7    Connection   Lexington  Ave.  &  42d  St  

.10 

.20 

500  000 

50  000 

1.50 

3.00 

120  000 

9    Centre  St   Loop  

1.17 

2.34 

510,000 

10    4th  Ave   Subway            

3.90 

15.40 

1,650  000 

11.  Connection  of  Williamsburg  Bridge  Line  to  Broad  way 

12.  Connection  of  Bridge  Loop  with  Broadway  Line  at 
St   Paul's  Church  Yard     

.26 
.28 

.53 
.57 

1,220,000 
1,400,000 

42,000 
50,000 

TOTAI,S  

35.43 

105.84 

79,406,000 

12,410,000 

Total  Mileage,  single  Track 105.84 

Total  Estimated  Cost,  Tunnel  Construction $79,406,000 

Total  Estimated  Cost,  Track  and  Station  finish,  etc 12,410,000 

Total  Estimated  Cost  of  Structure 91,816,000 

Estimated  Cost  of  Grand  Central  Extension,  33rd  St.  via  6th  Ave.  to  Lexington  Ave.  .        5,300,000 

97,116,000 
Interest  during  construction,  10% 9,711,600 

Grand  Total  Estimated  Cost $106,827,600 


or 


Funds  to  be  supplied  by  City— say $107,000,000 


The  cost  of  electrical  equipment,  including  ducts,  cables,  improved 
cars,  power  houses,  storage  yards,  shops,  etc.,  and  interest  during  con- 
struction, will  amount  to  $47,000,000. 

An  operator  can,  in  my  opinion,  be  found  to  provide  this  $47,000,000, 
so  that  the  City's  credit  need  not  be  taxed  for  that  amount. 


WILL  THE  SYSTEM  PAY? 

Passengers  carried  for  the  year  ended  June  30,  1910,  per  mile  of 
single  track  operated: 

Interborough  Subway 3,700,000  Passengers 

Hudson  Tubes 3,500,000  Passengers 

Manhattan  Elevated 3,240,000  Passengers 

As  its  lines  are  as  well,  if  not  better  located,  than  the  Interborough, 
the  Independent  System  should,  at  the  outset,  carry  as  many  passengers; 
but,  assuming  that  it  carries  only  two-thirds  as  many  as  the  Interborough, 
it  should  have  a  traffic  the  first  year  of  2,478,000  passengers  per  mile  of 
single  track.  As  the  single  track  mileage  will  be  approximately  106,  the 
gross  traffic  for  the  first  year  should  be  262,668,000  passengers  (719,638 
passengers  per  day)  which,  at  a  five-cent  fare,  would  give  a  gross  passen- 
ger revenue  of  $13,133,400  per  annum. 

Operating  expenses  and  taxes  would  not  exceed  40%  of  gross  passen- 
ger revenue — (Interborough  Subway  operating  expenses  and  taxes  for 
year  ended  June  30,  1910,  were  35.75  per  cent.). 

This  will  produce  a  net  revenue  of $7,880,040 

Add  revenue  from  advertising 400,000 


Total  net  revenue $8,280,040 

Deduct : 

Interest  6%,  Sinking  Fund  1%  on  $47,000,000 

equipment    $3,290,000 

4J9&  on  $107,000,000  City  Bonds 4,547,500       7,837,500 


Surplus— 1st  year   $    442,540 

These  figures  show  that  the  system  will  earn  fixed  charges  from  the 
start. 

In  my  estimates  I  have  provided  for  a  sinking  fund  of  \%  on  the  City's 
investment  beginning  with  the  4th  year,  in  order  to  give  the  new  system  a 

7 


chance  to  become  established.  The  following  is  a  tabulation  of  the  esti- 
mated yearly  surplus  after  payment  of  all  fixed  charges  and  sinking  funds, 
for  the  first  ten  years : 

1st  year $     442,540 

2nd  year 1,104,544 

3rd  year 1,766,548 

4th  year 1,358,552 

5th  year 2,020,556 

6th  year 2,682,560 

7th  year 3,344,564 

8th  year 4,006,568 

9th  year 4,668,572 

10th  year 5,330,576 


Total  profits  $26,725,580 

Under  an  operating  contract  for  an  equal  division  of  profits  between 
the  City  and  the  Operator,  the  City  would  receive  in  10  years  the  sum  of 
$13,362,790  over  and  above  interest  on  its  investment  and  a  sinking  fund 
of  1%  per  annum. 

At  the  end  of  the  10th  year  the  capacity  of  the  system  will  not  have 
been  exhausted ;  there  will  remain  a  large  capacity  in  reserve,  which  will, 
from  time  to  time,  be  called  into  use  as  the  necessities  of  the  community 
grow,  thus  increasing  earning  power  and  assuring  a  continually  expanding 
dividend  on  the  City's  interest  in  the  enterprise. 

With  such  a  showing  as  this  would  any  sensible  business  man,  stand- 
ing in  the  shoes  of  Father  Knickerbocker,  throw  away  such  a  valuable 
property  and  such  a  splendid  opportunity  to  increase  his  wealth?  As  a 
business  matter  pure  and  simple,  it  is  the  thing  for  the  City  to  do.  I  think 
it  is  a  moral  question  as  well,  but  so  many  people  seem  to  think  in  terms  of 
business  only  that  I  put  my  argument  on  that  ground  alone,  notwithstand- 
ing the  fact  that  I  consider  that  there  ought  to  be  moralities  in  business  as 
well  as  in  other  things.  Not  only  is  the  construction  of  the  Independent 
System  justified  by  the  City's  ability  to  invest  the  money,  but  also  by  the 
large  and  profitable  financial  results  which  will  flow  from  the  investment. 
In  addition,  a  great  system  of  transportation,  owned  and  controlled  by  the 
City,  is  established.  It  can  always  be  operated  in  the  best  interests  of  the 
people,  and  it  can  be  extended  from  time  to  time  as  the  public  necessity 
may  require.  Under  the  form  of  lease  which  I  would  suggest,  the  City  can 
control  the  operator  in  the  general  interest  of  the  travelling  public,  and 
that,  in  my  judgment,  is  one  of  the  most  essential  things  to  be  achieved  if 
a  permanent  solution  of  the  transit  problem  in  this  great  and  growing 
community  is  to  be  found. 

8 


IS  THERE  ENOUGH  TRAFFIC  TO  GO  AROUND? 

The  question  arises  as  to  whether  or  not  there  will  be  sufficient  traffic 
to  justify  the  estimates  of  earning  power  which  I  have  just  given.  A  few 
figures  ought  to  be  sufficient.  The  increase  of  traffic  on  the  Interborough 
Subway  for  the  last  four  years  has  averaged  23.75%  per  annum.  The  in- 
crease on  the  elevated  railroads  for  the  past  year  was  6.36%  per  annum. 
The  increase  on  the  Brooklyn  Rapid  Transit  lines  for  the  past  five  years 
has  averaged  almost  9%  per  annum.  It  would  not  be  fair  to  assume  that 
the  traffic  on  the  present  Subway,  even  if  it  had  the  capacity,  would  con- 
tinue to  increase  at  the  rate  of  23.75%  per  annum.  I  have,  therefore,  as- 
sumed that  it  may  increase  at  the  rate  of  10%  per  annum. 

The  following  figures  represent  the  number  of  passengers  per  annum, 
for  the  years  indicated,  which  would  be  offered  to  the  transportation  com- 
panies, in  excess  of  those  carried  during  1910,  provided  the  business  con- 
tinues to  increase  at  the  percentages  indicated: 

Per  Cent. 

Increase        1915  1920  1925 

Interborough  Subway   10%     130,000,000  260,000,000  390,000,000 

Manhattan  Elevated 6.36%       85,000,000  170,000,000  225,000,000 

Brooklyn  Rapid  Transit...      8%     246,000,000492,000,000  738,000,000 


461,000,000  922,000,000  1,383,000,000 

The  new  system  will  be  ready  to  operate  in  1915.  At  that  time  the 
normal  increase  ought  to  provide  461,000,000  of  new  riders,  or  198,332,000 
more  than  I  have  estimated  that  the  Independent  System  will  carry  the 
first  year.  This  indicates  that  nothing  will  be  taken  from  existing  lines, 
and  that  there  will  be  a  large  surplus  for  them  to  provide  for. 

The  estimated  capacity  of  the  Independent  System  is  800,000,000  per 
annum.  Five  years  after  it  begins  operation,  or  in  1920,  the  normal  in- 
crease of  traffic  in  Greater  New  York  will  be  922,000,000,  or  122,000,000 
more  than  the  Independent  System  can  care  for.  Ten  years  after  it  begins 
operation,  or  in  1925,  the  total  new  traffic  should  be  1,383,000,000  per 
annum,  or  583,000,000  more  than  the  total  capacity  of  the  Independent 
System. 

Can  we  shut  our  eyes  to  these  possibilities?  Are  we  never  to  learn 
anything  from  the  past? 

If  we,  for  expediency,  adopt  a  policy  now  that  will  prevent  the  City 
from  building  in  the  future  an  Independent  System,  we  must  place  our  sole 
reliance  for  future  relief,  on  "regulated  monopoly."  Can  we  safely  do  it? 
Is  it  wise  to  do  it? 

9 


Even  if  the  Interborough  be  permitted  to  build  extensions,  it  is  im- 
perative that  the  City  begin  right  now  to  construct  an  Independent  System, 
in  order  to  meet  the  conditions  which,  within  ten  years  after  its  comple- 
tion, will  be  crying  as  loudly  for  relief  as  now.  Why?  Because  the  Inter- 
borough  with  all  of  its  proposed  extensions,  will  have  a  capacity  of  about 
800,000,000  passengers  per  annum,  the  same  as  the  Independent  System. 
In  1925,  only  fifteen  years  hence,  and  only  ten  years  after  these  systems 
can  be  put  into  operation,  the  growth  of  traffic  will  require  the  use  almost 
of  their  combined  capacity.  The  Interborough  extended  as  proposed  is 
not  a  cure — it  is  only  a  palliative.  We  must  wake  up  to  the  magnitude  of 
the  problem  if  we  are  to  deal  intelligently  with  it. 

If  anyone  is  sceptical  about  the  growth  of  traffic  in  New  York,  let  me 
answer  him  in  a  few  words.  In  1904  the  total  traffic  of  the  Brooklyn 
Rapid  Transit  Company  was  400,000,000.  Had  anyone  predicted  then  that 
six  years  later,  or  in  1910,  the  traffic  on  this  same  system  would  be 
600,000,000,  an  increase  of  more  than  200,000,000  in  six  years,  he  would 
have  been  considered  a  false  prophet.  Had  anyone  predicted  that  the 
present  Subway,  which  had  138,000,000  passengers  in  1906,  would  carry 
269,000,000  passengers  in  1910,  an  increase  of  130,000,000  in  four  years, 
he  would  have  been  adjudged  a  paranoiac.  We  must  have  imagination — 
vision,  not  of  the  limited  hat-brim  variety,  but  of  the  giant  order  to  deal 
effectively  with  this  huge  problem. 

THE   INTERBOROUGH   PLAN. 

This  plan  provides  for  extensions  of  the  present  Subway  as  follows : 

(a)  Lexington  Avenue  from  42nd  Street  to  the  Bronx,  taking  in  the 
two  branches  to  Woodlawn  Cemetery  and  Pelham  Bay  Park  (the  Lexing- 
ton Avenue  section  is  an  essential  part  of  the  back-bone  or  trunk  of  the 
Independent  System,  and  its  use  by  the  Interborough  would  effectively 
destroy  all  possibility  of  an  effective  Independent  System) . 

(b)  Seventh  Avenue  from  42nd  Street  to  the  Battery. 

(c)  Liberty  Street  and  tunnel  under  East  River  to  Flatbush  Avenue, 
Brooklyn,  via  Pineapple  Street. 

(d)  Lafayette  Avenue  to  Broadway,  Brooklyn   (also  a  part  of  the 
Independent  System). 

(e)  Fourth  Avenue  Subway,  Brooklyn,  and  part  of  Centre  Street 
loop,  to  be  operated  if  City  will  pay  deficiencies  (this  is  also  an  important 
part  of  the  Independent  System). 

The  Interborough  estimates  that  the  cost  of  these  extensions  will  be 
$128,000,000.  It  proposes  that  the  City  supply  $53,000,000  and  the  Inter- 
borough $75,000,000.  That  net  earnings  of  these  extensions,  over  and 

10 


above  operating  costs   (not  including  any  part  of  the  earnings  of  the 
present  Subway)  be  applied. 

First.  To  the  payment  of  interest  and  sinking  fund  on  the  $75,000,000 
of  Interborough  money,  and 

Second.  To  the  payment  of  interest  and  sinking  fund  on  the 
$53,000,000  of  City  money. 

That  there  shall  be  a  universal  five-cent  fare  over  the  entire  Subway 
as  extended.  That,  at  the  end  of  ten  years  after  beginning  of  operation, 
the  City  may  have  the  right  to  buy  these  extensions  by  paying  the  Inter- 
borough  the  cost  thereof,  less  City  money,  as  well  as  the  value  of  the 
equipment  supplied  by  it,  plus  15%. 

It  proposes  that  the  earnings  of  the  extensions  be  determined  by  the 
number  of  tickets  sold  at  stations  or  taken  in  at  ticket-chopping  boxes  at 
stations  on  said  extensions. 

Also  that  all  surplus  earnings  of  these  extensions  for  the  first  five 
years  shall  go  to  the  City,  and  thereafter  that  they  be  equally  divided 
between  the  Interborough  and  the  City. 

These  are  the  essentials  of  the  proposition,  and  this  is  the  subject 
with  which  the  Board  of  Estimate  and  Apportionment  and  the  Public 
Service  Commission  are  now  wrestling. 

The  Interborough  also  proposes  that  its  present  lease  of  the  Subway, 
which  has  44  years  to  run  and  a  privilege  of  a  25-year  renewal  (upon 
terms  to  be  agreed  upon)  shall  be  reduced  to  a  fixed  term  of  49  years  from 
the  beginning  of  operation  of  the  extensions.  This  is  equivalent  to  a  fixed 
term  of  54  years,  since  the  extensions  cannot  be  completed  for  five  years ; 
that  its  lease  of  the  line  from  City  Hall,  New  York,  extending  under  the 
East  River  to  Flatbush  Avenue,  Brooklyn,  which  has  about  32  years  to 
run,  with  a  privilege  of  a  15-year  renewal  (on  terms  to  be  agreed  upon) , 
shall  be  changed  to  a  fixed  term  of  54  years,  so  that  its  lease  of  the  entire 
Subway  system  shall  expire  54  years  hence. 

I  shall  not  attempt  to  discuss  the  Interborough  plan  in  all  of  its  de- 
tails, as  I  do  not  want  to  overtax  your  patience  for  the  amount  of  time 
which  would  necessarily  be  consumed.  I  shall,  therefore,  confine  myself 
to  a  few  only  of  its  phases. 

INTERBOROUGH  EXTENSIONS. 

I  submit  a  map  showing  the  Interborough  extensions  disconnected 
from  the  present  main  line,  in  order  that  you  may  see  just  what  sort  of 
system  the  City  would  have  the  right  to  purchase  at  cost  plus  15%  at  the 
end  of  ten  years  after  their  operation  begins.  (Exhibit  3.) 

11 


You  will  observe  that  these  disjointed  pieces  of  track  would  be  of  no 
value  whatever  to  the  City  or  anyone  else  but  the  Interborough  Company, 
and  that  a  large  amount  of  additional  money  would  have  to  be  expended 
on  the  necessary  connections  and  additions  in  order  to  create  out  of  them 
any  sort  of  effective  transportation  facility. 

First  of  all  a  connection  would  have  to  be  built  from  Lexington  Ave- 
nue to  Seventh  Avenue. 

Even  this  would  be  of  little  value,  because  people  who  have  been  ac- 
customed to  transportation  by  a  direct  line  from  the  Bronx  down  the  East 
Side  to  the  business  section  of  the  City,  would  not  submit  to  a  wide  detour 
from  42nd  Street  and  Lexington  Avenue  to  Seventh  Avenue  and  then  be 
carried  down  the  West  Side  and  landed  in  the  lower  part  of  the  City  under 
the  Ninth  Avenue  elevated  railroad.  It  would  be  absolutely  essential, 
therefore,  to  construct  the  line  under  Lexington  Avenue  and  Broadway 
from  42nd  Street  to  the  Battery. 

In  Brooklyn,  various  extensions  would  have  to  be  built  in  order  to 
connect  the  Lafayette  Avenue,  the  Flatbush  Avenue  and  the  Pineapple 
Street  sections  with  each  other  and  with  the  Fourth  Avenue  subway. 

Careful  estimates  of  engineers  show  that  these  additions  and  connec- 
tions would  cost  $31,000,000.  Even  then  it  would  be  a  badly-balanced 
system.  There  would  be  four  tracks  in  Seventh  Avenue  and  four  tracks  in 
Broadway  south  of  42nd  Street,  a  total  of  eight  tracks,  fed  by  only  four 
tracks  north  of  42nd  Street.  Such  a  system  would  be  an  engineering  and 
operating  abortion. 

Exhibit  4  shows  the  detached  sections  in  solid  lines  and  the  necessary 
connections  in  dotted  lines. 

The  right  of  the  City  to  oust  an  operator  at  the  end  of  ten  years  is  of 
incalculable  value,  provided  it  extends  to  something  which  is  complete 
within  itself,  and  provided  also  that  a  financial  plan  is  adopted  whereunder 
the  City  can,  at  the  appointed  time,  exercise  this  right. 

In  order  that  the  merits  of  the  two  plans  may  be  fully  understood,  it 
is  necessary  to  project  ourselves  ten  years  into  the  future,  and  see  what 
will  be  the  City's  position  at  that  time  under  the  two  plans.  The  following 
is  a  statement  showing  what  will  be  the  cost  to  the  City  to  acquire  either 
system  at  the  end  of  ten  years 


12 


Cost  to  the  City  to  Acquire  either  System  at  the  end  of  Ten  Years 


City's  original  investment 

Private  capital  to  be  reimbursed  .    . 

Fifteen  per  cent,  additional  on  private  capital 


Cost  of  Connections  to  Complete  System; 

Lexington  Avenue  to  Seventh  Avenue 

White  Plains  to  Pelham  Park  Branch ... 

Brooklyn  Extension  to  Fourth  Avenue  Subway  ( Willoughby  St. ) 

Lafayette  Avenue  to  Fourth  Avenue  Subway 

Eastern  Parkway  to  Fourth  Avenue  Subway 

Lexington  Avenue  Line  from  Forty-second  Street  to  Battery  .    . 

Total  Cost 

Less  Credits; 

Sinking  Fund  of  1%  per  year  on  private  capital : 

Interborough,  10%  in  ten  years  on  $75,000,000  ....    .... 

Independent,  10%  in  ten  years  on     47,000,000 

Sinking  Fund  of  1%  per  year  on  City  investment : 

Interborough,  10%  in  ten  years  on  $53,000,000 

Independent,  7%  in  seven  years  on  $107,000,000 


Profits  resulting  to  the  City  from  its  equal  participation  in  surplus 
earnings  (after  deduction  of  all  fixed  charges.) 


Total  Credit 
Net  Cost 


Less  City's  original  investment 


New  Money  Required  of  City  at  the  End  of  Ten  Years 

Length  of  single  track , 


INTERBOROUGH 

$  53,000,000 
75,000,000 
11,250,000 


4,323,000 

585,000 

1,335,000 

600,000 

2,000,000 

23,000,000 

$171,093,000 


7,500,000 


5,300,000 


$  12,800,000 


$158,292,000 
53,000,000 


$105,293,000 


84  miles 


INDEPENDENT 


$107,000,000 

47,000,000 

7,050.000 


$161,050,000 


4,700,000 


7,490,000 


13,363,000 

25,553,000 

$135,497,000 

107,000,000 

$  28,497,000 
106  miles 


Independent  System  provides  22  miles  of  track  more  than  Interborough. 


Independent  System  is  a  complete  system  in  itself.  The  City  can  take  it  over  at  the  end  of  ten 
years  without  any  additional  construction, 

Whereas ; 

Interborough  extensions  are  all  disconnected  and  if  the  City  takes  them  over  at  the  end  of  ten 
years  the  City  will  have  to  spend  $31,000,000  of  new  money  to  build  the  necessary  connections  to 
create  a  system. 

13 


The  Independent  System  can  be  acquired  at  the  end  of  ten  years  upon 
payment  by  the  City  of  the  small  sum  of  $28,497,000,  whereas,  the  Inter- 
borough  extensions  with  the  additional  money  required  to  connect  them 
and  to  create  a  new  system,  will  require  the  City  to  pay  $105,293,000. 
After  this  has  been  done,  the  "Interborough  Extension  System,"  so  to  speak, 
will  have  22  miles  of  track  less  than  the  Independent  System,  and  it  will 
have  cost  the  City  $22,796,000  more  in  actual  money.  The  Independent 
System  will  have  been  in  operation  for  ten  years,  with  a  well-established 
business,  earning  large  profits,  whereas,  the  "Interborough  Extension  Sys- 
tem" will  have  to  be  created  anew,  and  will  have  to  build  up  a  traffic  for 
itself. 

The  Independent  System  will  be  superior  in  its  general  construction 
and  equipment  to  the  Interborough  system,  and  will  have  a  larger  capacity, 
because  the  cars  will  be  66  feet  long  as  against  the  Interborough's  52-foot 
cars,  insuring  larger  capacity  and  greater  economy  in  operation,  and  the 
dimensions  of  the  tunnel  will  be  larger,  assuring  better  track,  better  operat- 
ing conditions,  better  ventilation. 

In  order  to  make  the  City's  right  to  purchase  the  Interborough  exten- 
sions at  the  end  of  ten  years  of  any  value  whatsoever,  the  City  would  have 
to  begin  immediately  to  create  a  fund  which,  at  the  end  of  fifteen  years 
from  to-day,  would  amount  to  $105,293,000.  Approximately,  $7,000,000 
per  annum  would  have  to  be  set  aside  immediately  to  put  the  City  in  posi- 
tion to  take  over  the  Interborough  extensions  at  the  end  of  ten  years  and 
build  the  additional  lines  required,  whereas,  the  City  would  have  to  accumu- 
late $10,000,000  per  annum  for  five  years  only  to  build  the  Independent 
System,  because  it  has  $60,000,000  already  available  for  this  purpose,  and 
as  it  will  require  five  years  to  build  the  Independent  System,  the  whole 
financial  and  physical  operation  can  be  consummated  within  that  time. 

If  the  City  has  to  begin  now  to  set  aside  a  sinking  fund  to  buy  the 
disjointed  Interborough  extensions  at  the  end  of  ten  years,  and  to  build 
the  necessary  connections  and  additions  thereto,  it  would  be  much  wiser  to 
abandon  such  a  plan  and  to  devote  a  far  less  sum  of  money  to  the  creation 
of  the  complete  and  efficient  Independent  System,  which  it  can  take  over 
at  the  end  of  ten  years  without  additional  expenditure,  and  at  that  time 
come  into  possession  of  a  complete  system  with  an  established  traffic  and 
earning  a  large  and  profitable  surplus. 

TRANSFERS. 

The  chief  argument  in  favor  of  the  Interborough  plan  has  been  the 
universal  five-cent  fare. 

This  does  not  mean,  as  some  people  seem  to  infer,  that  there  shall  be 
a  universal  five-cent  fare  over  all  surface,  elevated  and  subway  lines  in 
New  York  and  Brooklyn.  It  means  only  that  there  shall  be  a  five-cent  fare 

14 


over  the  present  subway  and  the  extensions  proposed  to  be  made  to  that 
subway. 

Personally  I  do  not  believe  that  this  transfer  privilege  is  of  substan- 
tial value  to  the  great  mass  of  the  travelling  public.  It  is  more  imaginary 
than  real.  To-day  one  has  the  privilege  of  travelling  over  the  present 
subway  from  the  Yonkers  line  to  Flatbush  Avenue,  Brooklyn,  for  a  five- 
cent  fare,  but  what  percentage  of  people  exercise  this  privilege?  It  is  too 
small  to  calculate.  Nearly  every  person  who  uses  the  subway  or  the 
elevated  lines,  completes  his  journey  on  one  or  the  other  of  these  facilities. 
That  journey  is  usually  between  his  place  of  business  and  his  home.  The 
great  mass  of  people  who  are  transported  over  the  rapid  transit  lines  are 
interested  more  in  having  a  quick  and  comfortable  journey  between  their 
homes  and  places  of  business  than  in  a  transfer  privilege  of  which  they 
would  rarely,  if  ever,  avail  themselves.  What  these  people  want  is  more 
comfort  and  more  speed  for  the  five-cent  fare,  and  it  is  not  reasonable  nor 
just  to  sacrifice  the  interests  of  the  great  mass  of  the  people  in  order  that 
the  relatively  few  may  transfer  at  rare  intervals  to  some  connecting  line. 

Aside  from  this,  however,  it  must  be  borne  in  mind  that  the  Inter- 
borough  system  comprises  about  84  miles  of  single  track.  It  reaches  fewer 
of  the  important  business  and  residential  points  in  the  Bronx,  Manhattan 
Island  and  Brooklyn,  than  the  proposed  Independent  System,  which  is 
composed  of  106  miles  of  single  track,  22  miles  more  than  the  Interborough. 
For  a  five-cent  fare  one  will  be  carried  farther  on  the  Independent  System, 
and  to  a  greater  number  of  important  points  in  all  these  Borough,  than  can 
be  reached  by  the  present  subway.  The  Independent  System,  in  other 
words,  offers  more  for  five  cents  than  the  present  Interborough  can  offer, 
and  offers  almost  as  much  as  the  present  Interborough  with  its  proposed 
extensions,  can  offer. 

But,  if  the  universal  transfer  is  so  desirable  or  so  indispensable,  then 
it  can  be  secured  without  sacrificing  the  great  benefits  of  the  Independent 
System.  How?  By  a  clause  in  the  operating  contract,  requiring  the 
operator  of  the  Independent  System  to  transfer  at  such  connecting  points 
with  the  present  subway  as  the  City  authorities  may,  from  time  to  time, 
direct.  But  suppose  the  Interborough  refuses  to  consent  to  such  an  ar- 
rangement? Then  it  might  be  accomplished  by  refusing  to  permit  the 
Interborough  to  third  track  or  make  extensions  of  its  elevated  lines  (privi- 
leges of  great  value  which  it  has  for  years  been  trying  to  get)  except  upon 
the  condition  embodied  in  the  Franchise,  that  the  Interborough  shall  trans- 
fer with  future  intersecting  subway  lines  for  a  single  fare  of  five  cents 
at  such  points  as  the  City  authorities  may,  from  time  to  time,  determine. 
The  same  provision  should  also  be  inserted  in  any  contract  which  may  be 
made  with  the  Interborough  Company  for  extensions  of  its  present  sub- 
way, so  that  whether  the  Independent  subway  be  constructed  immediately 
or  not,  it  will  be  within  the  power  of  the  City  to  compel  an  exchange  of 

15 


traffic  at  a  single  five-cent  fare,  between  all  subways  which  are  built  with 
the  aid  of  City  money,  at  such  points  of  intersection  as  the  City  authori- 
ties may  deem  to  be  in  the  public  interest. 

This  transfer  privilege  is  especially  justifiable  where  the  City  fur- 
nishes all  or  any  part  of  the  funds  needed  for  the  construction  of  subway 
systems.  Why?  Because  the  company  thus  aided  gets  the  benefit  of  a  low 
interest  rate  on  the  money  supplied  by  the  City,  as  well  as  exemption  from 
taxation  on  the  structure.  These  advantages  which  accrue  to  the  operator 
from  the  use  of  the  property  of  all  the  people,  should  be  compensated  for 
by  a  universal  transfer  privilege  to  the  people.  The  cost  of  carrying  a  pas- 
senger on  any  given  line  is  less  where  the  interest  charge  on  the  money  is 
low  and  where  there  is  exemption  from  taxation,  than  upon  a  line  where 
the  interest  charge  is  high  and  there  is  no  exemption  from  taxation. 

The  operation  of  an  Independent  System  of  the  kind  I  have  sug- 
gested, and  the  operation  of  the  present  Interborough  system,  even  without 
any  extensions  and  a  universal  transfer  between  them,  would  supply  the 
public  with  a  larger  measure  of  convenient  rapid  transit  and  insure  a  better 
service  than  any  other  plan  that  can,  in  my  opinion,  be  devised. 

QUICK  RELIEF. 

It  has  been  urged  in  support  of  the  Interborough  plan  that  it  assures 
quicker  relief  than  the  Independent  System  can  provide.  This  is  an  error. 
The  determining  factor  of  relief  in  the  Interborough's  plan  is  the  construc- 
tion of  the  Seventh  Avenue  subway  from  42nd  Street  to  the  Battery.  It  is 
not  likely  that  this  extension  can  be  built  in  less  than  five  years.  Before 
any  work  can  begin  it  is  necessary  for  the  City  to  extend  Seventh  Avenue, 
through  private  property  from  its  southern  terminus,  to  Varick  Street. 
This  necessitates  the  condemnation  of  a  large  amount  of  real  estate,  with 
all  of  the  incident  delays  and  court  proceedings,  as  well  as  the  approval  by 
the  Court  of  the  Seventh  Avenue  line  as  a  rapid  transit  route.  An  ex- 
tremely complicated  and  difficult  piece  of  engineering  work  is  necessitated 
for  the  junction  of  the  Seventh  Avenue  line  with  the  present  subway 
at  Times  Square.  Five  years  at  least  would  seem  to  be  required  to  accom- 
plish this  part  of  the  work.  By  that  time  the  other  extensions  proposed 
by  the  Interborough  could  be  completed.  By  the  same  time  the  Independent 
System  can  also  be  completed.  All  of  the  routes  of  the  Independent  System 
have  been  approved  by  the  courts  with  the  exception  of  a  few  short  con- 
nections proposed  in  the  plan  I  have  submitted,  and  these  can  readily  be 
obtained  before  the  work  has  far  progressed,  and  need  not  in  any  wise 
delay  it. 

While  Seventh  Avenue  is  being  opened  through  private  property  to 
Varick  Street,  and  the  necessary  court  proceedings  are  being  taken  to 
authorize  the  construction  of  a  subway  between  42nd  Street  and  the 'Bat- 
tery, proceedings  for  the  Madison  Avenue  extension  of  the  Interborough 

16 


can  go  along  with  it  and  be  completed  by  the  time  that  the  Seventh  Avenue 
route  can  be  perfected.  The  objection  raised  by  the  Chamber  of  Com- 
merce Committee  that  there  would  be  a  great  loss  of  time  in  obtaining  the 
courts'  approval  of  the  Madison  Avenue  line  is,  therefore,  entirely  over- 
come. 

I  desire  to  repeat  that  the  Interborough  cannot  give  any  quicker  relief 
than  the  Independent  System,  as  each  will  require  about  the  same  time  for 
construction. 

42ND  STREET  SHUTTLE. 

In  considering  the  Interborough  offer,  a  serious  question  affecting 
operation  arises  in  connection  with  the  necessity  under  which  that  com- 
pany will  be  compelled  to  operate  the  so-called  "H"  system,  viz:  to  run  a 
shuttle  service  between  Times  Square  and  the  Grand  Central  Station,  if  the 
maximum  capacity  of  the  proposed  "H"  system  is  to  be  developed.  All 
passengers  on  the  West  Side  will  have  to  change  at  Times  Square  to  reach 
the  Grand  Central  Station.  If  they  want  to  continue  their  journey  down 
Fourth  Avenue  to  23rd  Street  or  Astor  Place,  or  any  other  point,  on  the 
present  subway  south  of  42nd  Street,  they  will  have  to  change  again  at  the 
Grand  Central  Station,  and  vice  versa,  all  persons  going  up  the  West  Side 
from  the  present  subway  south  of  42nd  Street,  will  have  to  change  at  the 
Grand  Central  Station  to  a  shuttle  train  and  then  change  again  at  Times 
Square  in  order  to  make  the  journey. 

Here  is  presented  at  once  the  same  problem  which  will  have  to  be 
faced  ten  years  from  now  if  the  City  should  take  the  upper  part  of  Lexing- 
ton Avenue  and  connect  it  across  36th  Street  to  the  proposed  Seventh  Ave- 
nue extension,  and  attempt  to  force  the  travelling  public  to  ride  on  this 
roundabout  route  after  it  has  been  accustomed  for  ten  years  to  direct 
transit  from  the  Bronx  to  the  Battery.  The  people  will  never  submit  to 
such  a  change. 

It  must  never  be  forgotten  that  once  a  route  of  transportation  has  been 
established,  and  the  people  have  been  accustomed  to  its  use  for  a  long  time, 
a  vested  right  accrues  to  the  people  to  be  transported  over  that  particular 
route,  and  a  vested  right  of  property  accrues  in  that  particular  route 
because  great  business  interests  have  grown  up  around  it,  and  have 
been  established  upon  the  faith  of  a  continuance  of  the  transit  facilities 
so  provided.  Any  change  in  these  established  routes  works  great  injus- 
tice and  inconvenience  to  the  people  as  well  as  to  property  interests.  The 
people  of  the  upper  West  Side,  and  property  owners  there,  as  well  as 
property  owners  in  Fourth  Avenue,  where  great  business  houses  have  been 
constructed  in  the  last  few  years,  do  not  realize  how  seriously  their  inter- 
ests may  be  affected  by  this  threatened  change.  I  do  not  undertake  to  say 
how  the  Interborough  Company  will  operate  its  new  extensions,  but  I  do 
say  that  the  maximum  capacity  which  these  extensions  are  built  to  supply, 

17 


can  never  be  attained  by  any  other  means  than  the  operation  of  a  shuttle 
under  42nd  Street  with  all  of  the  inconveniences  and  discomforts  which 
that  implies. 

TEN-YEAR  TERM. 

POSSIBILITY  OF  INTERBOROUGH  SECURING  THE  OPERATION 
OF  THE  INDEPENDENT  SYSTEM  BY  BIDDING  FOR  IT  OR 
SUBSEQUENTLY  ACQUIRING  CONTROL  OF  ITS  OPERATOR. 
It  has  been  stated  that,  even  if  the  City  built  an  Independent  System, 
it  would  have  to  ask  competitive  bids  for  its  operation.  Those  who  make 
such  an  assertion  are  either  ignorant  of  the  law  or  misinformed.  It  is  not 
necessary  to  ask  for  competitive  bids  for  the  operation  of  the  Independent 
System  any  more  than  competitive  bids  are  required  for  the  operation  of 
the  proposed  Interborough  extensions.  In  either  case  it  rests  entirely 
within  the  discretion  and  control  of  the  Public  Service  Commission  and 
the  Board  of  Estimate  and  Apportionment  to  contract  with  an  operator 
without  competitive  bidding.  The  law  only  requires  that  such  contract 
shall  not  be  perfected  until  public  hearings  thereon  have  been  held.  The 
reason  for  this  is  obvious.  If  the  City  were  desirous  of  preventing  a 
monopoly,  its  purpose  would  be  thwarted  if  a  monopoly  could  bid  for  the 
Independent  System  and  compel  the  acceptance  of  its  offer  merely  because 
its  price,  in  money,  was  less.  The  authorities  have  the  right,  under  the 
laws,  to  award  the  operating  contract  to  such  operator  and  upon  such 
terms  as,  in  their  judgment,  is  to  the  best  advantage  of  the  public.  Natu- 
rally, the  authorities  would  not  award  such  contract  to  the  monopoly,  either 
upon  a  direct  bid  from  it  or  knowingly  upon  the  bid  of  a  masked  company 
organized  in  its  interest. 

EFFECTIVE   PREVENTION. 

There  is  a  simple  and  effective  way,  however,  to  prevent  any  such 
occurrence.  Under  the  Indeterminate  Franchise  Act,  the  City  has  the 
right  to  acquire  the  Independent  System  at  the  end  of  ten  years  upon  pay- 
ment of  the  cost  of  equipment  plus  15%,  and,  at  any  time  after  ten  years 
upon  payment  of  cost  with  a  diminished  percentage.  By  putting  a  clause 
in  the  operating  contract  that  the  City  shall  have  the  right  at  any  time, 
upon  twelve  months'  previous  written  notice,  to  take  the  property  from  the 
operator  upon  payment  of  the  cost  of  equipment  plus  20%,  control  of  the 
situation  would  be  absolutely  in  the  hands  of  the  City,  and  the  prevention 
of  monopoly  would  always  be  assured.  The  law  justly  provides  that  a 
diminished  percentage  shall  be  paid  after  the  end  of  the  ten-year  term, 
and  with  equal  justice  the  contract  may  provide  for  an  increased  per- 
centage if  the  City  takes  the  property  before  the  end  of  the  ten-year  term. 
With  such  a  protective  provision,  no  operator  would  be  deterred  from  tak- 
ing a  lease. 

18 


GOOD  BEHAVIOR  OF  OPERATOR. 

With  the  showing  I  have  made  of  earning  power  for  the  Independent 
System,  I  do  not  hesitate  to  say,  regardless  of  all  the  advantages  which  the 
public  would  derive  in  the  way  of  improved  service  and  facilities,  that  the 
construction  of  the  Independent  System  by  the  City  is  justified  as  a  busi- 
ness proposition  only.  It  is  time,  also,  to  establish  the  principle,  in  such  a 
striking  and  effective  way  as  this  will  do,  that  the  City  shall  benefit  to  a 
large  degree  in  its  future  rapid  transit  development.  With  an  operating 
contract  such  as  I  have  described,  the  operator  will,  at  all  times,  be  upon 
his  best  behavior  in  the  management  and  conduct  of  the  property,  because 
he  will  know  that  his  tenure  and  the  continuance  of  his  profits  depends 
absolutely  upon  decent  treatment  of  the  public,  which  is  only  another  way 
of  saying  that  he  will,  at  all  time,  give  the  best  service,  in  the  way  of  speed 
and  frequency  of  trains,  quality  and  lighting  of  the  cars  and  stations, 
cleanliness,  deportment  of  employees,  and  general  administration. 

The  value  of  these  features  cannot  be  over  exaggerated.  I  can  best 
illustrate  them  by  asking  this  question — suppose  that  the  contract  under 
which  the  Interborough  is  now  operating  the  subway  had  in  it  a  provision 
that  ten  years  from  the  date  of  beginning  of  its  operation,  the  City  had  the 
right  to  terminate  the  lease  and  repossess  itself  of  the  subway  upon  pay- 
ment of  the  cost  of  equipment  plus  15%  ?  Do  you  suppose  that  the  subway 
would  be  as  indifferent  to  public  opinion  as  it  is  to-day?  No.  The  oper- 
ator would,  on  the  other  hand,  be  putting  his  best  foot  forward  to  please 
the  public,  because  he  would  know  that  in  the  absence  of  popular  approval 
and  support,  the  end  of  his  profitable  lease  was  already  in  sight.  And  if 
the  City  did  have  this  right,  what  would  it  not  be  worth  in  a  business 
sense?  Three  years  hence  it  would  take  over  the  present  subway  by  pay- 
ing to  its  owners  something  like  $45,000,000  and  come  into  possession  of 
a  property  earning  a  splendid  surplus  over  all  charges.  Are  we  going  to 
throw  away  another  opportunity  to  control  our  subways  and  earn  large 
profits  for  the  public  Treasury  ? 

REGULATED   MONOPOLY. 

It  does  not  seem  to  me  necessary  to  enter  upon  a  discussion  of  the 
relative  advantages  of  competition  and  monopoly.  The  competition  which 
I  have  in  mind  is  not  one  in  destructive  rates,  but  in  the  quantity,  quality 
and  character  of  the  service  provided  by  the  railroad  company.  Not  only 
does  such  competition,  more  than  any  other  single  agency,  stimulate  im- 
provement and  efficiency  in  the  service  over  the  roads  themselves,  but  also 
in  the  treatment  accorded  by  the  officers  and  employees  of  the  companies, 
to  the  great  public.  More  than  this,  while  the  lines  may  not  be  competi- 
tive at  all  points,  there  will  be  a  competition  between  sections  on  the  dif- 
ferent lines.  Take  the  Bronx,  for  instance,  suppose  the  two  companies 
were  operating  in  this  territory,  one  having  a  line  on  the  East  Side  of  the 

19 


Bronx  and  another  on  the  West  Side.  The  seekers  of  suburban  homes 
would  undoubtedly  locate  along  the  line  of  that  road  which  gave  the  best 
service  in  the  matter  of  speed,  comfort  and  general  convenience.  Each 
company,  therefore,  in  order  to  build  up  the  vacant  territory  on  its  respec- 
tive lines,  would  have  to  put  its  best  foot  forward  to  get  results.  All 
intermediate  territory  along  each  line  would  be  benefitted  by  the  superior 
service  thus  induced. 

Monopoly  under  regulation  has  not  proven  satisfactory.  As  I  have 
said  before,  regulated  monopoly  is  a  beautiful  theory,  but  it  does  not  "pan 
out"  in  practice.  We  have  tried  it  here  for  five  years.  Are  you  satisfied 
with  the  results?  Not  a  foot  of  new  subway  has  been  built,  and  it  is  with 
extreme  difficulty  that  needed  improvements  have  been  secured.  There 
is  no  railroad  man  who  does  not  know  that  regulation  by  the  most  powerful 
Public  Service  Commission  on  earth  can  only  go  to  a  certain  point.  No 
Commission  can  effectively  control  schedules  or  the  amount  of  service  to 
be  given  over  a  road.  No  Commission  would  dare  to  take  the  risk  of 
ordering  trains  run  at  a  higher  rate  of  speed  than  the  managers  of  the 
road  declared  to  be  safe.  No  Commission  can  so  effectively  enforce  its 
orders  for  regulation  of  train  schedules,  quantity  of  train  service,  etc.,  as 
will  accomplish  the  desired  result  against  the  opposition  of  an  unwilling 
or  reluctant  management.  This  is  particularly  true  as  to  the  quality  of 
the  service  rendered.  There  are  infinite  numbers  of  ways  of  thwarting 
the  Commission's  will.  Not  only  that,  but  the  constitutional  right  of 
property,  that  is,  the  right  to  control  and  to  manage  one's  own  property, 
forbids  the  interference  of  any  Commission  beyond  a  certain  well-defined 
line.  While  we  have  heard  it  iterated  and  reiterated  lately  that  the  pres- 
ent subway  is  the  City's  property,  the  Interborough  Company,  in  refusing 
recently  to  obey  an  order  of  the  Public  Service  Commission,  declared  that 
such  an  order  was  an  interference  with  its  right  of  ownership  and  control 
of  its  property.  The  subway  is  the  Interborough's  property  for  69  years, 
because  it  has  a  lease  from  the  City  for  that  length  of  time,  and  no  one  can 
interfere  with  its  right  to  the  use  and  enjoyment  of  that  property  until 
that  lease  expires.  The  Commission  is  already,  therefore,  confronted 
with  the  assertion  of  the  very  constitutional  right  of  which  I  speak,  viz: 
the  right  to  control  and  manage  private  property. 

A  lease  is  just  as  much  private  property,  and  is  just  as  sacred  a  prop- 
erty right,  as  any  form  of  property,  and  no  Commission  can  deprive  the 
owners  of  its  use  and  enjoyment.  The  Commission  may  regulate,  within 
reasonable  limits,  but  no  more. 

The  greatest  regulative  weapon  is  the  right  of  the  City  to  oust  an 
offending  operator,  upon  twelve  months'  notice,  and  put  in  another  who 
will  give  satisfaction.  If  all  "transit  companies  look  alike  and  are  alike," 
and  are  bad  in  their  likeness,  then  it  is  high  time  to  create  a  new  and  right 
type.  The  City  has  the  chance,  for  the  first  time  in  its  history,  to  produce 

20 


an  ideal  transportation  system  and  to  have  it  ideally  operated,  and,  at  the 
same  time,  to  make  money  for  the  tax  payers.  , 

ONE  COMPANY  EASIER  TO  REGULATE. 

Why  should  it  be  any  more  troublesome  for  the  Public  Service  Com- 
mission to  regulate  two  subway  companies  than  one?  The  Commission 
seems  to  be  composed  of  able-bodied  and  husky  men  who  are  not  in  need 
of  relaxation  from  undue  strain.  Seriously,  however,  I  claim  that  two 
companies  in  healthy  rivalry  are  easier  for  the  Commission  to  regulate 
than  one  unwilling  and  recalcitrant  company.  This  rivalry  will  do  more 
automatically  in  the  way  of  regulation  than  all  the  orders  that  the  Com- 
mission can  promulgate.  The  Commission  will  get  so  much  relief  from 
the  annoyance  of  the  rapid  transit  problem  after  the  Independent  System 
is  established,  that  its  members  will  find  their  positions  "things  of  beauty 
and  joys  forever." 

But  if  it  is  an  argument  for  "monopoly"  that  the  ease  of  the  Commis- 
sion is  a  factor  to  be  considered,  then  it  might  be  argued  that  all  public 
utilities,  such  as  gas,  electric  light,  telephone  and  transportation  lines,  be 
combined  into  one  company.  Nobody  would  favor  that. 

The  truth  is,  that  we  have  attempted  to  regulate  monopoly  not  because 
we  believe  that  regulated  monopoly  is  good,  but  because  we  know  that  un- 
regulated monopoly  is  bad.  Regulated  monopoly  is  better  than  un-regu- 
lated  monopoly.  Un-regulated  competition  is  better  than  regulated  mon- 
opoly; but  regulated  competition  is  better  than  un-regulated  competition 
or  regulated  monopoly.  What  we  want  and  what  we  must  have  is  regu- 
lated competition. 

There  are  many  other  interesting  features  of  this  problem  that  I  would 
like  to  discuss,  but  my  feeling  of  consideration  for  you  admonishes  me  to 
stop.  In  conclusion: 

HOW   MAY   WE   GET   NEW   SUBWAYS? 

It  seems  to  me  that  the  City  so  thoroughly  holds  the  whip  hand  in  the 
situation  that  definite  action  can  be  taken  quickly  without  in  any  wise 
interfering  with  negotiations  with  possible  builders  or  operators  of  addi- 
tional subways. 

1.  Let  the  City  begin  to  build  the  Independent  System  and  negotiate 
with  the  Interborough  and  all  other  companies  while  the  work  is  in 
progress. 

Don't  postpone  construction  to  negotiation,  but  postpone  negotiation 
to  construction. 

2.  Revise  the  plans  of  the  Triborough  route  on  the  smaller  dimen- 
sions, with  nine  inches  more  in  vertical  height  than  the  present  Interbor- 
ough section ;  change  "reservoir  stations"  into  stations  with  loading  and 

21 


unloading  platforms;  provide  for  the  connections  of  the  Centre  Street 
loop  at  Spring  Street  and  at  Vesey  Street  and  Broadway. 

Contracts  for  construction  might  be  let  upon  the  bids  already  received, 
with  a  stipulation  that  the  City  may  have  the  right  to  change  the  dimen- 
sions, station  plans,  etc.,  as  above  suggested,  and  that  the  unit  bids  shall 
apply  to  the  decreased  dimensions,  etc.,  in  precisely  the  same  way  that  they 
apply  to  the  larger  dimensions  upon  which  the  bids  were  based.  If  these 
contracts  should  be  awarded  under  these  conditions,  work  can  be  begun 
immediately,  and  the  revision  of  plans  can  go  along  with  it  so  that  no  time 
whatever  would  be  lost. 

3.  Whether  the  Interborough  extensions  are  built  or  not,  the  Inde- 
pendent System  will  be  needed  and  should  be  built  by  the  City  under  any 
circumstances.     The  sooner  this  work  is  begun  the  better. 

4.  It  would  be  wise  to  negotiate  for  an  operator  for  the  Independent 
System  as  soon  after  the  beginning  of  its  construction  as  possible,  because 
the  operator  can  be  of  great  service  during  the  construction  period.     If  he 
is  experienced,  his  knowledge  of  operating  conditions  will  make  it  possible 
to  effect  large  economics  in  the  cost  of  construction  as  well  as  promote 
greater  efficiency  and  capacity  in  the  system. 

5.  Delays  in  consummating  an  agreement  or  arrangement  with  the 
Interborough  Company,  or  with  any  prospective  operator  of  the  Inde- 
pendent System,  would  not,  under  this  plan,  delay  the  prompt  beginning  of 
construction  and  completion  of  the  Independent  System. 

6.  From  every  point  of  view  this  course  is  of  advantage  and  is  to  the 
best  interests  of  the  City  of  New  York.     Tactically  and  strategically,  it  is 
the  sound  and  sensible  thing  to  do  in  any  consideration  of  this  question 
which  implies  proper  regard  for  the  interests  of  all  the  people,  regardless 
of  any  local  section  or  clique  or  faction.     The  welfare  of  the  people  as  a 
whole  must,  as  it  should,  be  the  determining  influence.     The  time  has  come 
when  the  real  people  must  be  considered.     The  views  of  civic  bodies  and 
interested  persons  must  not  be  taken  too  seriously.     The  real  people  are  the 
masses,  who  use  the  subways  most,  and  it  is  their  interest,  because  they  are 
most  affected,  which  should  have  the  first  claim. 

Once  the  City  begins  to  construct  the  Independent  System  progress  in 
every  direction  will  be  easier  and  it  will  be  easy  to  secure  terms  that  the 
City  ought  to  have.  If  you  will  excuse  a  homely  metaphor,  the  City  holds 
"Four  Aces"  in  this  Subway  game  and  it  ought  not  to  lay  them  down  to 
anybody's  "Bob-tail  Flush." 


22 


INDEPENDENT  SYSTEM 

EVCRY     THING     IN     SOLID  LINES 
CAN    BE  BUILT   AT   A  TOTAL 
COST   OF   STRUCTURE,  INCLUD- 
ING   TRACK    AND    SIGNALS   AND 
INTEREST    DURING    CONSTRUCTION 

107.  000,000. 


N 


EXHIBIT  NO.  I 


23 


\      w      DETAIL  OF  PROPOSED 
\         CONNECTIONS  BETWEEN 
BROADWAY  TRUNK  *  CENTER  ST.  LOOP 


EXHIBIT    NO. 2 


24 


INTERBOBOUGH  EXTENSIONS 

WHICH   CITY   COULD 

TAKE   AT   END   OF 

10   YEARS. 


AY 


EXHIBIT    NO.3 


25 


INTERBOROUGH  EXTENSIONS 

IN   SOLID   LINES. 
DOTTED   LINES   INDICATE 

NEW   CONSTRUCTION 
REQUIRED   AT   END   OF   TEN 
YEARS   TO    CREATE   A    SYSTE1 

A 

<t/ 
<0 

Or 
4/ 
^> 


ISI 


EXHIBIT    IUO.4 


26 


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